In an interesting Tech Alert sent yesterday from the Wall Street Journal, it was announce, with few details, that Apple is in talks with J.P. Morgan Chase, Capital One Financial, Wells Fargo and U.S. Bancorp to offer a person- to- person (P2P) payment service.
The service under consideration would allow consumers to zap payments from their checking accounts to recipients through their Apple devices. The service would likely be linked to the company’s Apple Pay system, which allows customers to make credit-card and debit-card payments with their mobile phones.
The banks mentioned in the article collectively own Early Warning which is, as of the merger last month, the company that owns ClearXchange, a P2P platform operator. ClearXchange offers the retail customers of these banks, plus participant member 1stBank, the opportunity to quickly and securely exchange funds among each other. These banks collectively reach over 100 million individuals, regardless of their mobile phone brand. The ClearXchange platform also permits individuals who do not bank with one of the mentioned financial institutions to create an account and transmit funds as well.
So although Apple led the headline, who has the most to gain if this partnership happens?
Will Apple pay the banks for ClearXchange services? That would be an interesting departure from Apple Pay where banks pay Apple for each transaction.
Or will Apple help to bring the other 2,700 banks that it does business with through Apple Pay into the ClearXchange fold?
We will have to wait for more details and wait for the P2P service anticipated in 2016.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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